[runarberg]

This is a really good question, and there isn’t a clear answer. I’m only answering this from the left point of view though, so take it with a pinch of salt.

Traditional labor theory can make arguments for both, if you put in most of the work, then you deserve most of the benefits. However the case for equal pay is also solid, especially if the fruits of labor are abundant. How much does 5 million give you that 1 million doesn’t, and why shouldn’t you settle for 1 million if it means everyone would get more?

But from a leftist perspective there is a fault in the question (but it is still a good question). Namely that you sell the business. In an ideal left world, you wouldn’t do that. The business belongs to the workers. If the workers can all form a consensus that it is time to leave the business and sell it to another set of workers—those that leave will be bought out basically—then this is a valid scenario. However if under a new leadership, some workers are receiving more benefits then others, then that is exploitation. I would say actually that the new leadership is exploiting their previous workforce by spending the money the workers created by buying a new business without their consent.

So in short, you as the founder of the business that was bought, are enabling exploitation by selling it to a larger organization (unless you sell it to a worker owned and operated business).

[erik_seaberg]

Workers can bank their paychecks and walk away at any time. They would deserve more of the benefits if they bore more of the risks of failure, like investors are doing.

[runarberg]

Yes, as a leftist, I’m not a believer in that. I’m of the opinion that the supposed risk that investors take is overstated. The average investor is quite wealthy compared to most workers, and can afford to loose a bunch of that money without it causing significant harm, even leaving the investor still significantly wealthier then the worker. On top of that, many investors have insurance, or a wide portfolio of low risk stocks, guaranteeing them continued exploitation without risking much.

Compare this to a worker, most of whom can’t afford to go without paychecks for a single month. Meaning that the loss of a job is far riskier then the investor’s supposed risk of loosing their investment.

This transaction between an investor and a worker (if you look at it as a transaction) is always biased significantly towards the investor, they will grab proportionally more of the profit and tank less of the loss. So I would say the average worker is both risking a lot more and reaping less of the benefits.

[erik_seaberg]

I agree that investors self-select partly by their ability to weather losses, which is why workers tend to trade away speculative upside for the certainty of wages now. But investors need a reason to take on risk, we need to steer more resources under the guidance of the most successful of the competing decision makers, and profit solves those problems.